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Spice Mobility historical branding expenses indicate upward trend for FY-2015

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BENGALURU: Indian mobile devices company Spice Mobility Limited (Spice -formerly S Mobility Limited) spent 89.9 per cent more towards branding expenses in the year ended 30 June 2014 (FY-2014) at Rs Rs 78.35 crore (3.7 per cent of total income from operations or TIO) as compared to Rs 41.26 crore (2.2 per cent of TIO) in FY-2013.

For the 15 month period ended 30 June 2013 (15M-2012), the company spent only Rs 9.61 crore (3.5 per cent of TIO), while in the 12 month period ended 31 March 2011 (FY-2011M), the company had also spent Rs 6.51 crore (3.2 per cent of TIO) towards branding.

Spice has reported a loss of Rs 28.15 crore in FY-2014 as compared to a PAT of Rs 5.48 crore in FY-2013, a loss of Rs 0.97 crore in 15M-2012 and a profit of Rs 10.4 crore in FY-2011M.

Note: 100,00,000 = 100 Lakhs = 10 million = 1 crore

Let us look at the branding expenses by the company over an eight quarter period starting Q1-2013 (quarter ended 30 September 2013) until Q4-2014 (quarter ended 30 June 2014). Please refer to the figure below:

Over this eight quarter period, the lowest branding spend has been in Q3-2013 at Rs 9.21 crore (2.3 per cent of TIO) in Q3-2013 (quarter ended 31 March 2013) in absolute rupee value, while in terms of percentage of TIO, the company’s lowest branding spend at 1.8 per cent (Rs 9.76 crore) in Q1-2013. It may be noted that both these lowest quarterly spends are at par with Spice’s branding spend during 15M-2012 and significantly higher than the branding spend in FY-2011.

Spice’s highest branding spend during the eight quarter period under consideration in absolute rupee terms has been in Q4-2014 at Rs 24.47 crore (4.5 per cent of TIO), while in terms of percentage of TIO it was in Q3-2014 at 4.6 per cent of TIO or Rs 21.71 crore.

The figure above shows that on a quarterly basis, with time the linear trend lines depict branding spends in absolute rupees and percentage of TIO diverge. This indicates that the company’s branding spends in absolute rupees can increase further, but the increase in terms of percentage of TIO may be at a lower comparative rate or even flat on an annual basis,  but, brand spends could depend upon the company’s overall performance during the coming quarters and the financial year/s.

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